Month: October 2006

If you’re like me you love watching college football every Saturday in the Fall.

Ever consider retiring to a college football town?

They can be good places to live.

“College towns have so much to offer residents, such as employment,
continuing education, cultural opportunities and, of course, sports,”
Gillespie said in a release. “Many of these markets are very attractive
to Baby Boomers who want to downsize or retire from urban areas, as
well as first-time home buyers who are just entering the marketplace
and realizing how far their money can go.”

-Adam

Top 10: Most affordable college football townsCNNMoney.com? –8 hours ago… who dreamed up the index, points out that college towns can be good places to live … are very attractive to Baby Boomers who want to downsize or retire from urban …

Fidelity’s making it easier to plan for retirement with their simplified retirement calculators.

All you have to do is answer 5 questions.?

Fidelity Investments said yesterday it will simplify its online retirement planning tools, citing both its own experience and academic research supporting this conclusion: People are lazy.

“Americans just love to procrastinate when it comes to planning and saving for retirement,” said Fidelity vice chairman Robert L. Reynolds during a presentation in New York yesterday, carried on a conference call.
He cited a company survey that found just 29 percent of 1,511 working people considered themselves good at financial planning.
The new tools and a forthcoming ad campaign aim to help people start saving and “get them into the pool, even if it’s a wading pool” at first, he said in a later interview.
Among other things, the law makes it easier for financial companies to offer advice directly to workers on how to save for retirement, and makes it easier for employers to enroll workers automatically into savings plans when they are hired.
With an eye on these changes, other large investment organizations including Vanguard Group Inc. and TIAA-CREF also have added online calculators and tools to draw in more retirement savings.
By raising savings rates, investment companies also aim to increase the assets they manage and in turn their profits.Reynolds and other Fidelity executives said their new online guidance program, “myPlan,” will go live in two weeks and will show users a simple total amount of money they must save to support the retirement they envision based on five questions.
Users don’t have to be Fidelity customers, and the site also will have tools to create a broader retirement plan in 30 minutes, Fidelity said.
That’s a problem, as traditional pension plans are in decline, said Abigail P. Johnson, president of Fidelity’s corporate services division and daughter of company chairman Edward C. Johnson III, in rare public comments.
Yet there are still 22 million people who don’t participate in corporate savings plans they are eligible for, she said, because they face other demands on their cash and may be confused by too many choices.
“People don’t want to give anything up; they only want to act when there’s a sense of urgency; and all those investment choices make it harder to take action,” she said.
Fidelity also stocked the New York event with a trio of economists from Harvard, the Massachusetts Institute of Technology, and the University of California who have done research into the ways people decide how much to save or spend.
Their field, know as behavioral economics, tries to explain why individuals don’t always act in obvious or rational ways.
For example, a chief obstacle to savings is that it doesn’t produce immediate tangible benefits, said Harvard economist Brigitte Madrian.
Another panelist, MIT’s Dan Ariely, said in a later interview that he and the others were paid to appear, but did not play any direct role in developing Fidelity’s products.
-Adam

Call it savings for slackers. Fidelity Investments said yesterday it will simplify its online retirement planning tools, citing both its own experience and academic research supporting this conclusion: People are lazy.

No matter what age you are now, you probably think about Social Security benefits as they relate to your retirement planning. If you are younger, you may choose to run retirement projections with reduced or no benefits. For those of you who are middle-age to retirement-age, Social Security will probably be a piece of your retirement picture.

This article highlights what to expect and what not to expect from a financial advisor.

Their free retirement calculators will provide you with a good snapshot of your financial picture and let you know if you will be able to meet your retirement goals but that’s just it – they are only a snapshot.? If your life changes then you need to do the calculations again.

 Establish a good work/life balance many years before you retire and zealously maintain it.

 Refrain from working on weekends.

 Maintain optimum health while you are working.

 Be open to learning new things at work and in your personal life.

 Read Barbara Shers Its Only Too Late If You Dont Start Now: How to Create Your Second Life After 40.

 Have a major life purpose other than your work so that you have a purpose when you take early retirement.

 Develop close friendships removed from your workplace.

 Maintain  i.e. don’t neglect  your true friends so that they are still around when you retire.

 Learn how to handle freedom. A good way is to become self-employed for at least a year or two before retirement.

 Accept that money will buy style and comfort, but it won’t buy you happiness.

 Spend a lot of time alone while learning how to enjoy solitude.

 Indulge in regular strenuous exercise so that you will be physically fit and able to enjoy retirement activities.

 Take all your paid vacation time so that you learn how to be more leisurely.

 Travel a lot. People who don’t get to enjoy travel before retirement seldom develop a liking for it after retirement.

 Don’t allow your identity to be tied to your job.

 Find many ways to connect with the world.

 Take an unexpected day off work, and ensure that you loaf it allaway to experience what it’s like to be a member of the leisure class.

 Take a pre-retirement course that deals with the personal issues and not only the financial issues.

NOTE: This article is adapted from several books by Ernie J. Zelinski including How to Retire Happy, Wild, and Free: Retirement Wisdom That You Won’t Get from Your Financial Advisor (over 57,000 copies sold).

Make sure you have long term care insurance on your retirement planning checklist
Experts warn that more than 95 percent of U.S. boomers are unprepared for long-term-care needs associated with living a long life.

Jesse Slome, executive director of the American Association for Long-Term Care Insurance, says most people acknowledge it’s a mistake to put off retirement planning until age 60, but not enough realize the same is true for planning for long-term care.
“Those who delay long-term-care planning until after retirement may find themselves unprotected against a risk that could wipe out their retirement savings,” says Slome.
Healthcare and long-term-care costs have increased faster than the Consumer Price Index, according to some studies.
“In 15 years, today’s 60-year-old can expect to pay $80,000 to $120,000 for a single year of care,” Slome said.
“For those who are uninsured, the cost of long-term care for even two or three years can wipe out one’s retirement savings.”
Insurance companies offer incentives for individuals who are in good health when applying for long-term-care coverage, so payments cost less if insurance is purchased when you are younger and in good health.
-Adam

Congress passed a resolution declaring this week National Save for Retirement Week.

The resolution says that because of the increased costs of retirement and data showing that many workers aren’t saving for retirement, lawmakers feel that emphasis is necessary to help promote saving.
Brian Haendiges, senior vice president of institutional markets for ING U.S. Financial Services in Atlanta, applauded the push.
But he said that emphasizing retirement planning should be a year-round priority.
“We’re thrilled that Congress has recognized the need for Americans to save more,” Mr. Haendiges said.
The attention from Congress this week means that it will be the perfect opportunity for advisers to contact plan sponsors, Mr. Haendiges said.
Some advisers have planned educational and marketing events with plan sponsors, he added.
-Adam

Congress gives retirement its own weekInvestmentNews,? NY? –Oct 23, 2006… Atlanta, applauded the push. But he said that emphasizing retirement planning should be a year-round priority. “We’re thrilled that …

How prepared are you for retirement?? Get your R-Score.
Market research demonstrates boomers turning to web for retirement planning needs.

In response, Nationwide Financial Services launches a free innovative financial resource and “Retirement Calculator.”
RetirAbility Check(SM), available at www.nationwide.com, is a free, innovative and customized financial resource and “retirement calculator” that enables users to generate a single number — their R-Score(SM), similar to a credit score — that measures their retirement readiness.
Recent Nationwide research shows nearly half of Americans go online to search for financial planning resources and information, yet many (44 percent) believe financial service providers are missing the mark on ease of use and content.
“Our research indicates Americans want to be engaged beyond just data, statistics and online questionnaires,” said Keith Millner, senior vice president of Nationwide Financial’s In-Retirement business unit.
Each step has been strategically planned to keep the user engaged.
The result is an experience that is new, smart, entertaining…and a bit different.”
The peer-level comparison data is derived from the National Retirement Risk Index, exceptional research conducted by the Center for Retirement Research at Boston College and funded by a grant from Nationwide.The Index revealed a disturbing fact — 43 percent of Americans are at risk of being financially unprepared for retirement.
“The Index discovered that Americans need more sources of guaranteed lifelong income, smarter investment strategies and increased savings.
Nationwide sought to translate all of this intelligent research into a consumer-friendly format.
The result is a fun experience that allows users to evaluate their financial risk profile in the context of their peers,” said Millner.
RetirAbility Check(SM) — which is free and anonymous — is simple to use, open to anyone and can be completed in less than eight minutes: (1.) Users are introduced to RetirAbility Check(SM) by an engaging host, who challenges them to find out how prepared for retirement they are “in the amount of time it takes to make a box of macaroni and cheese.”
Users fill out basic demographic and financial information.
The guides interact with users in surprising and sometimes quite comical ways — from playing the air guitar to acting out animal sounds, it all depends on who is answering the questions, and how!
As users move through the questions, they receive factoids and tips about how to improve their score, all while being teased and cajoled by their online guide.The score represents how prepared users are to meet their retirement needs.
In other words, a score of 56 means they are on track to have 56 percent of what they need to maintain their current standard of living if they retire at age 65.
Users will receive a description of the score and be presented feedback on the number; peer and national averages appear here as well, giving the user information about how his or her score compares to others.
At this point, the user receives personalized suggestions for score improvement.
“Nationwide Financial believes it is imperative consumers are challenged in new ways to improve their retirement readiness.
The Index bundled together complex pieces of the retirement puzzle to come up with a collective measurement of our retirement readiness as a nation.
-Adam

Identify your financial goals
(Note:? This article is aimed towards readers in India but the principles are the same throughout the world)
For individuals, the first step in their financial planning exercise is to set their goals/objectives.

By setting your goals you know exactly what you want and can accordingly redouble your efforts to realise your objectives.
For individuals, making investments has different purposes.
For some it may be simply for saving money as and when required for future needs, while for others it may be towards a specific goal/objective.
An individual’s life is full of events.
While some events are unpredictable such as accident or sickness, many of them are basic, yet important life stage events like child’s education, marriage, planning to buy a property, retirement planning.
A common link between both predictable and unpredictable events is that it can put tremendous strain on your finances, so if you are well prepared for the same, it may not be as burdensome.
This is where the importance of setting goals/objectives becomes palpable.
You have saved some money, but you do not have a specific objective in mind.
If need be, you can employ it for something as critical as buying a house/property.
At the same time you have no qualms about buying a car with that money or even going for a vacation.
Coincidentally, finances for your child’s education are also expected to be met from that investment, ditto your daughter’s marriage.
So you have a half a dozen needs and just one fund.
This is a perfect recipe for a financial disaster.
Expectedly, you are not aware when and for what purpose you will require money in an emergency.
However, you could have at least planned for a contingency fund/reserve, but didn’t.
In such a scenario when you meet with an emergency situation, you find yourself in a lurch since you have nothing to fall back upon.
If you have set aside another fund for a critical objective like child’s education, you may be tempted to dip into that fund to handle the emergency, which is a regressive step as far as your child’s future is concerned.
If you do not have funds when you need them (like in an emergency) you may be tempted to take a loan (increase your liabilities) or ask a favour from your friend (which can be an embarrassment if it happens often).
Either ways, this is not the best way to counter a financial emergency and can impact your finances significantly.
The above-mentioned problems can be countered through a straightforward solution — identify your objectives well in advance.
When you set objectives upfront, you know the purpose of the money as also the timing (when you will require the money).
Your facing a financial crunch is highly unlikely as you are aware about the quantum of money required for an event that is planned for well in advance, and thus you have made your investments accordingly.
Even if it’s an emergency, you are well prepared for it through a contingency fund.
Once your planning is in place, you are self-sufficient and are in no need to ask favours from any source.
Since your financial planning exercise is heavily dependent on your ability to set clear objectives, it should be very comprehensive, and should make provision for predictable as well as unpredictable events.
While there are several important objectives an individual must plan for, we have taken one that is critical for most parents — child’s education.
The cost of education in today’s age can be prohibitive.
However, if you have planned for it, the cost may not prove all that burdensome.
Let’s see how this can be made possible.
Assume that at present an MBA programme of 2 years in a leading business school costs Rs 500,000.
The age of your child is 5 years today and he/she will pursue the course at the age of 20 years.
The time available to plan for your child’s education is 15 years.
Assuming that the cost of an MBA degree appreciates at 10% per annum, the degree after 15 years would cost Rs 2,088,624.
Now this seems to be a bit too much, doesn’t it?
But not when you plan for it.
If you have your objectives and investment plans in place, this amount may not be that difficult to achieve.
Now that you are aware of the amount required for your child’s education, the next step is to make the investments to achieve that target.
Let us assume that over a 15-year period, you make investments in well-managed diversified equity funds which yield a cumulative return of 12% CAGR (compounded annualised growth rate).
This would entail investing around Rs 4,430 per month.
Suddenly the Rs 20 lakh (Rs 2 million) education fees do not appear so daunting.
Imagine, what would be the consequence if you have not planned for this astronomical sum in advance.
Paying for your child’s education at that stage would prove to be a mammoth task for you.
The above strategy of planning well in advance holds good for other objectives as well such as buying a property or your child’s marriage among others.
The key to successful investing lies in regularly setting tangible, realistic goals and working towards achieving them.
Individuals should have multiple portfolios, each of them catering to a earmarked objective.
While setting objectives could be an easy task, the challenge is to get the right asset allocation.
A well-qualified and honest investment advisor can play a vital role in this.
But the onus of planning well in advance to realise your objectives is on you.
-Adam